The Department of Justice wants T-Mobile and Sprint to help create a new player in the wireless space, before it will approve its $26.5 billion merger, and that player might just be Comcast and/or Charter.
According to a report out of Bloomberg on Wednesday, the Justice Department wants T-Mobile and Sprint to help establish a fourth carrier. And now a new report out of the same publication on Thursday, notes that the two might sell some of its spectrum, to help establish that fourth carrier. This report also noted that the Justice Department have met with Comcast and Charter today, to talk about selling some spectrum to them, as well as taking on the role of being a fourth wireless carrier.
T-Mobile, Sprint and their parent companies, are looking to get their merger approved, still. While the FCC has already approved it, the Justice Department has not. It does not want to see the market lose a carrier, which would reduce competition. And that's where the portion about the DOJ wanting the two carriers to establish a new player in the space comes in.
Selling some spectrum to Comcast and/or Charter, would make the most sense for the two carriers. T-Mobile and Sprint together have a ton of spectrum, and the majority of that spectrum likely won't be used entirely with its 5G network. So this would mean they could bring in some extra cash to pay off Sprint's debt, but also satisfy the Justice Department.
Comcast and Charter are both already in the wireless space, to a degree. The two have launched MVNO carriers, running on Verizon's network. Xfinity Mobile and Spectrum Mobile, respectively. These two run on Verizon, and then jumps onto their mobile hotspots that are available throughout the country. But if either of them are able to get a chunk of spectrum from T-Mobile or Sprint, it could turn them into a legitimate player in the wireless space.
When it comes to building out on that spectrum, should it be acquired, both companies also have plenty of cash to do that. But what's interesting here, is that DISH was not in the conversation. DISH has acquired a ton of spectrum in the past decade or so, but has yet to build out a network, or even launch a network. Getting some more spectrum (and potentially help from the government) would get the ball moving for them.
If T-Mobile and Sprint were to sell off some of its spectrum to Comcast, it could still make it harder for the new T-Mobile to compete with Verizon and AT&T. Comcast is already the largest ISP, and that's going to make it easier to build out their network and get customers to switch to Xfinity Mobile. Which is already growing pretty quickly, thanks to Comcast bundling it with its other services.
This should be the last box that T-Mobile and Sprint need to check in order for its $26.5 billion merger to be approved by regulators. The merger was announced in April 2018, and the two still expect it to close by the end of the first half of this year.